Allison, 65 years old, is the former chairman of investment company TIAA-CREF and was an executive at Merrill Lynch.

In September, he agreed to run Fannie Mae after the U.S. took over the mortgage giant and its sister firm, Freddie Mac .

The Wall Street Journal reports that Obama could announce his intention to nominate Allison as assistant secretary for the Office of Financial Stability as early as this week. Allison would replace Neel Kashkari, a holdover from the Bush administration, who was asked by Treasury Secretary Timothy Geithner to stay on until a replacement was found.

The selection will leave the administration searching for permanent leaders of both Fannie and Freddie. David Moffett, Freddie's CEO, announced his resignation last month.